Contrasting data

Editorial

Not all is bad in the economic front. Standard & Poor’s on Friday raised its credit rating outlook for the Philippines to positive from stable, while the Filipinos working and living abroad sent home a record $1.78 billion in October.

Exports, by contrast, shrank 14.6 percent to $4.09 billion in October this year from $4.79 billion year-on-year. Shipments abroad fell for the sixth straight month as the global demand for electronics continued to weaken.

The Philippine economy will likely grow at a slower pace of 3 percent to 4 percent this year from its robust expansion of 8 percent in 2010 due to government underspending and weak exports. It is projected to grow a modest 5 percent to 6 percent in 2012 unless the Aquino administration sheds its conservative stance and begins to build roads, bridges and other basic infrastructure needed by the economy.

The weak exports, meanwhile, will take their toll on the economy. Exports account for about 20 percent of the gross domestic product, and there is a general consensus that they will keep slowing down in the coming months amid Europe’s debt problems and the weak growth in the US, world’s largest economy.

Still, the economy is holding up as the international debt watcher Standard & Poor’s sees it. S&P’s decision to upgrade the rating outlook on the Philippines suggests an actual credit rating upgrade. Rating the Philippine credit standing to investment level, for one, will lead to cheaper foreign loans and bring in more foreign investments because of the relatively lower risks.

But the Philippines cannot expect foreign investors to come in droves here until the basic infrastructure is put in place. The country’s international airport pales in comparison to similar facilities in Asia. Traffic in Metro Manila is bad precisely because of the lack of toll and expressway roads that can serve as alternate routes.

Inadequate roads and bridges lead to the inefficient transportation of workers and goods and overall production losses. But with basic infrastructure, we can expect more positive and consistent economic data to come out.